U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15702 / April 9, 1998
UNITED STATES V. LEONARD E. FIESSEL, ROBERT L. SHULL, TERRY
L. SHULL and PATRICK A. COLLINS, Crim. Action No. 98-10112-
MLW (D. Mass.).
The Commission and the United States Attorney for the
District of Massachusetts announced that on April 8, 1998,
Leonard A. Fiessel, Robert L. Shull, and Terry L. Shull,
all of British Columbia, Canada, and Patrick A. Collins, of
Massachusetts, were indicted by a federal grand jury for
participating in a scheme to artificially increase the stock
price of Fairmont Resources, Inc. ("Fairmont"), a Canadian
oil and gas company . The 45-count indictment charges the
defendants with securities fraud, conspiracy to commit
securities fraud and wire fraud. Previously, the Commission
obtained permanent injunctions and orders to pay
disgorgement against Leonard Fiessel, Robert Shull, Patrick
Collins and six others for their participation in the
scheme.
The indictment alleges that after Leonard Fiessel and Robert
Shull purchased a controlling interest in Fairmont, the
defendants caused the price of Fairmont stock to increase
from $.30 to $3.10 per share between January and June 1993
by (1) paying kickbacks totaling $540,000 to stockbrokers
in the United States for inducing their customers to
purchase approximately 1,225,000 shares of Fairmont stock;
(2) creating the false appearance of an active market in
Fairmont stock by buying and selling large quantities of the
stock, including through "wash sales" and "cross trades,"
and (3) controlling the timing of transactions in Fairmont
stock to ensure that the stock price would continue to rise.
The indictment also alleges that as a result of their
manipulative activity, Leonard Fiessel, Robert Shull and
Terry Shull sold large blocks of Fairmont stock at a
substantial profit. The indictment also alleges that
Collins, a self-employed promoter of penny stocks, received
cash and shares of Fairmont in order to promote the sale of
Fairmont stock to U.S. investors, and that he used some of
that money to pay a U.S. stockbroker for selling shares of
Fairmont to his clients.
In a complaint filed on August 31, 1994, the Commission
alleged that Leonard Fiessel, Colleen Fiessel, Robert Shull,
Patrick Collins, and five U.S. stockbrokers -- Mark Hamel,
Robert Raffa, William Cho, Jeffrey Fernandez and Michael
Murphy -- violated the antifraud and registration provisions
of the federal securities laws. Final judgments have been
entered against all of the defendants in that action, and
they have been ordered to disgorge over $2 million.
For further information, see Litigation Release Nos. 14213,
14342, 14352, 14441, 18409 and 15021.